The reason why the majority of eateries aren’t able to manage their budget and suffer losses is actually that they aren’t able to keep the costs under control with the help of systematic restaurant cost breakdowns.
Restaurant Cost Control is important because it allows you to identify the particular area of the expenses and take preventive and corrective measures to keep a balanced ratio between your finances and expenses.
1. Automated Manual Process Is Mandatory
Placing, accepting orders and billing has long been deemed a labor-intensive job. If done manually, it simply leaves scope for manual errors and also takes time.
An intelligent restaurant management program which performs the entire billing and ordering procedure – right from programmed Tablet Ordering to instant invoicing – reduces the need for costly human resources required to perform these tasks.
Having a cost management system – which features a kitchen display system – will certainly cut down the dependency on hard physical work to a great extent, which experts claim will reduce labor costs.
Once the order is recorded in the POS – it gets quickly shown on the kitchen-screen in real-time.
2. Reporting of Restaurant Costs
Another significant tip that you need to follow is always to keep track of overall business expenses.
Real-time reporting comes incredibly handy in this situation. By keeping an eye on the numbers and through instant reporting, you’ll be in a position to have an air-tight control over the business and find out the areas of income leakage and at the same time maintain a lookout on sales-purchase records.
3. Managing Wastage Through Portion Management
Big portions and overproduction are warning signs of wastage which trigger escalating food costs.
You must have the particular tools to calculate the portions and careful process to manage the size of portions. Appropriate plating of the meals is important as over plating of foods will lead to wastage and high food costs.
We recommend creating a monitoring graph based on the following parameters:
- Food Spilled on the floor or in the kitchen
- Food Returned by your Customer
- Food wasted while cooking
- Extra Servings that get dumped
Before you start testing these parameters, you must take remedial actions in line with the results.
For example, if foods are being returned by your customers, either you have to improve the quality or taste of the food.
If food is frequently being burnt in the kitchen area, you have to train the chefs better or probably consider buying better kitchen equipment.
4. Buying Raw Materials on Credit to Cut Down the Cost
You can easily manage your restaurant costs by opting for smart cash purchases and managing all the purchases through your restaurant’s account on a credit basis.
Generally, the raw materials bought in cash tend to be less in quantity and may turn out to be costly in comparison with when you’re purchasing them in large quantities.
Buying the raw materials on credit may be beneficial because it helps you run the restaurant effectively, generate sales revenue and then remove the credit for the money you made. Think about the Credit Period before choosing the restaurant’s vendor.
More commonly, it is around 10-25 days but varies from vendor to vendor. Make sure you set up the rules of transaction, receiving, and ordering. Enroll in a ‘Purchase Group,’ whenever possible, to considerably lower restaurant expenses.
In a particular Purchasing Group, due to a large number of purchasers, suppliers usually lower the prices.
5. Monitoring & Controlling Stock to Reduce Food Costs
The first thing about restaurant cost management is actually monitoring and managing the stock.
It is recommended to track your day-to-day stock-in and stock-out as well as the actual usage 24-hours a day. Keeping track of the particular difference between the actual physical stock and ideal stock will certainly help you determine if there’s too much squandering of resources taking place at the restaurant.
A Difference between 5-7% is normal – anything on top of that usually means that a large amount of wastage or even misappropriations may be taking place at the restaurant.
A good Inventory and Stock Management System comes in handy in this particular situation, because it makes it possible to keep an eye on the Difference, provides you with real-time reports as well as allows you to set re-order amounts for individual inventory items.
By doing this, you only have to order the things when they reach a particular re-order level as well as get rid of the chance of under-ordering or over-ordering. You should also buy wholesale food inventory, which is another step to take for reducing the restaurant’s costs as retail foods will certainly be expensive and will badly impact your bottom-line.